Judge Hears Florida Retirement Contribution Case

A judge on Wednesday repeatedly challenged the state's defense of a new law that requires public employees to contribute 3 percent of their pay to the Florida Retirement System.

The Florida Education Association, other public employee unionsand several individual workers have asked Circuit Judge JackieFulford to strike down the law. It also eliminates annual 3 percentcost-of-living increases on any pension benefits earned after itwent into effect on July 1.

Fulford gave no indication when she'll rule. The case isexpected to wind up before the Florida Supreme Court.

The unions contend the law violates contract, property andcollective bargaining rights guaranteed by the Florida Constitution. A 1974 law that eliminated employee contributions to the retirement fund also says pension benefits are a contract right.

Doug Hinson, a lawyer hired by the state, argued the Legislaturehad the authority to take that action under its constitutionalbudgeting powers.

"It does not say you can gut it," Fulford said. "It doesn'tsay you can do away with it. It doesn't say you can change it tovoluntary. It doesn't say you can change it to contributory."

Florida Education Association lawyer Ron Meyer similarly arguedthe ruling does not apply to the current case because theLegislature went well beyond modifying or altering, and insteadchanged the retirement system's fundamental nature.

The law had the effect of cutting pay by 3 percent for about560,000 teachers, police officers and other state and localgovernment employees.

Hinson and co-counsel David Godofsky displayed charts on a largescreen showing employees' retirement benefits still will increasebased on additional time of service after July 1.

Fulford, though, stepped down from the bench and pointed toother numbers on the screen showing an employee's benefits will beless than what they would have been without the cost-of-livingchange.

One example on the chart was for plaintiff George Williams, headcustodian for the Madison County School District. His projectedretirement benefits would drop by $26,536 and his contributionswould total $5,856 by the time he retires.

"He's paying more and getting less," Fulford said. "You arepunishing him for continuing to work."

Meyer said he was encouraged by Fulford's comments.

"She obviously gets it," he said.

The defendants include Gov. Rick Scott. He chairs a board thatoversees investments for the $121.6 billion pension fund. Scott hadasked the Legislature to make employees contribute 5 percent. Hesaid public employees should be treated the same as private sectorworkers who in most cases must contribute if they have pensionplans.

Hinson acknowledged the retirement changes were made as acost-cutting measure, not to beef up the pension fund. Florida'sretirement plan is rated as one of the nation's strongest. Employercontributions were reduced by more than $1 billion and that meansemployees now are paying more than half of the plan's annual cost,Meyer said.

"I personally, your honor, am not without concern for theemployees that have been impacted by this change," Hinson told thejudge. "But what the Legislature has done is spread the impact ofa fairly significant budget reduction across an entire populationof employees."

The pension changes were less onerous than other budget-cuttingoptions lawmakers had considered such as pay cuts and layoff, hesaid.

Meyer, though, later said the budget could have been balancedwithout changing the retirement system because lawmakers sockedaway $1.2 billion in reserve funds.

He told Fulford the plaintiffs are not challenging the state'sright to require employees hired after July 1 to contribute oreliminate the cost-of-living adjustments when they retire.

"But the state got greedy," Meyer said. "The state said,`We're going to forget the contract and we're going to dip intoemployees' pockets."'

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TALLAHASSEE 10/26/2011 -- The hearing on Wednesday is expected to just be the first step on a path leading to the Florida Supreme Court.

The Florida Education Association and other unions contend the law is unconstitutional. They say it violates public employees' contract, property and collective bargaining rights.

Defendants in the suit include Gov. Rick Scott. He chairs a board that oversees investments for the $121.6 billion Florida Retirement System.

Scott had asked the Legislature to make employees contribute 5 percent, but lawmakers approved only 3 percent.

Unions say it also amounts to a pay cut for teachers, state and county workers and some city employees.

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